Beyond fare hikes to a new Sydney

The shape of Sydney stands to be dramatically changed by the impacts of the Parry Inquiry into Sustainable Transport. The results should be appropriate transport infrastructure, and accompanying more efficient land use, for the four key corridors in Sydney which do not have it. The new cabinet infrastructure group which will review Dr Tom Parry's recommended innovative private and public funding mechanisms has a unique chance to overturn three decades of inertia.

Dr Parry's is a well-defined pitch. Fix inefficiencies in rail and bus operations, financing the solutions by driving real rises in fares and real cuts in costs. Implement a selection of funding arrangements for expansion to fill the gaps between public transport costs, subsidies and revenues. Dr Parry's recommendation on real fare rises and discounts are reasonable and necessary. CityRail's fares are low by world standards and its funding needs chronic.

The rail reliability program is based on untangling the interconnected lines. CityRail says it needs $1.5 billion to fix the conflicting operations over 10 years. That is too expensive and too long. Parts of the network are past capacity limits and further demand growth is expected. The projects need to be approved in order of delivering improvements in trip, waiting and transfer times.

On operating efficiencies, the report talks tough on cost reduction in buses and CountryLink but skims over the big one, CityRail. That is among the most expensive of metropolitan railways anywhere. It warrants a full and urgent efficiency review. This requires the most courage - from politicians and unions - before CityRail can earn the right to access further funding. For good reason, Treasury officials have been unwilling to put good money after bad into CityRail's black hole.

The linear medium density developments in the city's south-east and north-east, for example, better suit lower-cost rail options to galvanise development. Nor do they need to wait for system reforms as soon as new sources of capital can be tapped.

Dr Parry surveys a list of capital funding options and recommends a Transport Fund which draws on varied sources. It is a step Sydney must now take. The sources include modest developer levies in new release corridors, private development of key hubs, value-capture fees on property whose prices have benefited from the new services, and motor vehicle and council household charges. Several new forms of private-public partnerships, electronic road pricing and motorway tolls - by distance and in both directions - are also recommended for cabinet review. Crafted smartly, they are sellable to an electorate impatient for renewed services.

Oddly for a report on sustainable transport, Dr Parry includes no discussion of existing road money. Private partnerships should be actively encouraged for major roadworks because they work financially. But the extra private funds should in turn be used to release some existing road funding for public transport to keep infrastructure growth balanced.

Dr Parry has mapped out the funding revolution. The real sustainability of transport then comes when lines on maps are incorporated into a well-designed land use plan where fully supported major town centres are placed on those lines, where higher density villages are closely grouped around every intermediate stop and clear priorities are signalled for private capital. The Parry recommendations should be welcomed by the community and embraced by the cabinet decision-makers, who alone can deliver the long overdue urban reform.

An ugly division of spoils of war

Australia should take no satisfaction from its inclusion in the US Defence Department's list of nations considered fit to bid for $24 billion worth of prime contracts to rebuild Iraq. The Prime Minister, John Howard, says: "You're dealing with American dollars and I can understand exactly what the Americans are getting at." Yet the point, surely, is that the rebuilding of Iraq is not a prize of war to be shared by the United States among its closest allies or withheld to settle old scores. It is an international responsibility to assist the people of Iraq - the ones who have suffered most - and to restore their land to them free and whole.

One part of the US Administration seemed to understand the need for broad international co-operation in the reconstruction task. James Baker, who served as secretary of state under George Bush snr, was appointed to begin a mission next week to persuade Iraq's biggest creditors - which include Russia and France - to forgive or alleviate as much as possible of Iraq's enormous foreign debt. The debt is about $US128 billion ($173 billion), or roughly 10 times Iraq's economic output this year.

Yet the December 5 directive of the US Deputy Defence Secretary, Paul Wolfowitz, will hardly encourage Iraq's creditors to co-operate. By disqualifying countries which opposed the US invasion from tendering for prime reconstruction contracts in Iraq, it smacks of vindictiveness. By saying that the exclusion of such countries "is necessary for the protection of the essential security interests" of the US, it implies such countries pose some threat to the US.

Mr Wolfowitz's directive implies that the exclusion of some countries as tenderers for the reconstruction contracts is meant as a financial incentive for them to send troops to Iraq. It may also be a warning to others, like Australia, with troops there, to think twice before withdrawing them. This has been a clumsy, counter-productive exercise. It retards the nation-building effort needed in Iraq. It is a reminder of the risks the US took by going to war without the fullest international support, and confirms how imperfectly it understands the need to mend fences now.